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What is the Key to FP&A and Winning the Super Bowl? Don't Beat Yourself.

By Bryan Lapidus, FP&A

Published: 1/30/2018

You probably have heard that the New England Patriots are in the Super Bowl. Again. In the past 17 seasons, they have been to 12 AFC Championship games leading to eight Super Bowls and five titles (so far). This is an unparalleled period of sustained excellence in a sport known for parity among teams.

One key to their success is the stability and excellence in two of the most important positions: head coach and quarterback. Their approach to the game was neatly summarized in Head Coach Bill Belichick’s comment: “We can’t win until we keep from losing.” This means do not beat yourself with errors, lack of preparation, and lack of focus. Here are two ways that the Patriots demonstrate this over this impressive run.

They have been among the least penalized teams over this period: seven times they were among the five best teams (out of 32) with the fewest number of penalties.

They have given the ball away to the opposing team less often: eight times they were among the five best teams at committing the fewest turnovers.

Sports are full of this idea being spoken in various forms from coaches, players and pundits. We can also see this advice of not beating yourself applied in other areas. Warren Buffett seems to have a similar approach in his investing philosophy. “Rule number 1: Never lose money. Rule number 2: Never forget rule number 1.” In other words, do not be frivolous and take foolish risks with money. Be informed and prepared by doing your research.

So how can your FP&A team make sure that your organization does not lose in the marketplace by beating itself, or by making unforced errors that lead to excess effort, time, cost, or sacrificed revenue? Here are four ideas:

Keep an honest score: We help the organization make informed decisions based on quantitative analysis and business judgement in at least three areas. First, we need to make sure that we present forecasts that best represent where the company is heading, and discuss potential risks and opportunities that can swing the outcome. Second, our financial analyses and business cases should be based on reasonable assumptions and validated models; we need to challenge the business to produce the best outlooks. Third, in our role as advisor to the business units, we present operational metrics that tell the truth about potential outcomes in our performance reviews, KPIs and dashboards. Through all of these mechanisms, we help to allocate capital to its most productive source.

Developing skills throughout the business: While we are subject matter experts in finance, one of the ways we can do so is to instill that sense of capital discipline throughout the business. At the AFP Conference last October, a round table participant who rotated from delivery operations into FP&A, said it best: “The knowledge you have in one area makes you better in another. When I was in delivery operations, I did not understand the finances, I just knew that I needed to get this freight moved. Working in finance gives you a different perspective on how everything fits together.” He wished he could back to delivery operations again and apply the finance perspective he learned.

Standardize rules of the game: In football, there is an official, 92-page rulebook and crews of referees at each game in order to make sure everyone follows the same set of rule and the game is played fairly. In internal business operations, FP&A can play a similar role. Articulating a standard process for developing a budget, defining calculations and metrics for investment valuations, and creating a culture of operational excellence can reduce friction by focusing efforts on what creates value for the company. It can also minimize unhealthy habits such as sandbagging the budget and focusing on business silos rather than the company benefit overall.

Demonstrate excellence: Within the finance team, how are you demonstrating excellence so that you can provide support to the organization? That may include building flexible models and systems, reducing the effort to integrate data through single source of truth and common definitions, developing your people, or building capacity to handle volatility.

In all these ways, FP&A can help the business play its best game.

Bryan Lapidus, FP&A, is a contributing consultant and author to the Association for Financial Professionals. Reach him at BLapidus@AllegianceAG.com.

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